InvestMacro

By JustMarkets

At Friday’s close, the Dow Jones Index (US30) increased by 0.33% (+2.38% for the week), while the S&P 500 Index (US500) was down by 0.10% (+2.53% for the week). The NASDAQ Technology Index (US100) closed negative by 0.18% (+3.43% for the week) on Friday.

Rising interest rates, which surprised many US banks, proved to be a boon for the nation’s largest banks. JPMorgan Chase (JPM) posted record profits, and some of its major competitors reported better-than-expected loan income. Shares of JPMorgan Chase (JPM) rose by 0.6%, while Wells Fargo (WFC) fell by 0.3%. Both major banks reported higher quarterly earnings but said they set aside more funds to cover expected losses on commercial real estate loans. Friday’s quarterly reports unofficially opened the second quarter in the US. According to Refintiiv, analysts expect S&P 500 earnings for the quarter to be down by 8.1% compared with a year ago result, but most companies are expected to beat expectations.

The US consumer sentiment jumped to a near two-year high. The University of Michigan’s preliminary index rose by 8.2 points to 72.6, the highest level since September 2021. The index beat all forecasts. The surge in sentiment was largely attributed to a continued slowdown in inflation along with stability in the labor market. Friday’s report also showed that consumers expect low unemployment over the next year, and most believe their incomes will rise by at least as much as inflation rises. While longer-term inflation expectations appear reasonable, minutes from the Fed’s June meeting showed that some officials remain concerned that these expectations may become unreasonable, especially in light of stronger-than-expected consumer demand and a robust labor market.

Equity markets in Europe were mostly down on Friday, but all closed in positive territory at the end of the week. Germany’s DAX (DE30) decreased by 0.22% (+3.33% for the week), France’s CAC 40 (FR40) added 0.06% on Friday (+4.12% for the week), Spain’s IBEX 35 (ES35) was down by 0.43% (+2.47% for the week), and the UK’s FTSE 100 (UK100) closed negative by 0.08% (+2.45% for the week).

US Treasury bond yields have fallen sharply over the past week as traders raised bets that the US Federal Reserve’s monetary tightening program is coming to an end. Rate-sensitive UST 2 yields are down 50 basis points since last Thursday, while UST 10 yields are down about 30 basis points, and UST 30 yields are down about 18 basis points over the same time period. Since gold and silver have an inverse correlation to US government bond yields, there is a high probability of continued uptrends in the precious metals.

Despite a slight decline in oil prices on Friday, oil prices posted their third consecutive weekly gain last week, and the potential for further gains remains as weakening inflation, plans to replenish the US strategic reserve, supply cuts, and production disruptions in some OPEC countries support black gold prices.

Asian markets were mostly on the rise last week. Japan’s Nikkei 225 (JP225) was little changed for the week, China’s FTSE China A50 (CHA50) gained 2.20%, Hong Kong’s Hang Seng (HK50) ended the week up by 3.55%, and Australia’s S&P/ASX 200 (AU200) ended the week positive by 3.70%.

Chinese indices fell sharply on Monday after data showed a significant slowdown in the country’s economic growth in the second quarter. China’s gross domestic product (GDP) grew by 0.8% in the second quarter. The figure was above expectations of 0.5% growth but significantly weaker than the 2.2% jump recorded in the first quarter. The annualized GDP figure fell short of expectations, showing growth of 6.5% vs. the expected 7.3%. China’s manufacturing sector also came under pressure due to sluggish overseas demand for Chinese exports amid deteriorating economic conditions globally. The data suggest that the economic recovery in Asia’s largest country is decreasing and that the government will likely have to consider additional stimulus measures in the coming months.

S&P 500 (F)(US500) 4,505.42 −4.62 (−0.10%)

Dow Jones (US30) 34,509.03 +113.89 (+0.33%)

DAX (DE40)  16,105.07 −35.96 (−0.22%)

FTSE 100 (UK100) 7,434.57 −5.64 (−0.076%)

USD Index  99.96 +0.19 (−0.19%)

• – China GDP (q/q) at 05:00 (GMT+3);
• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Retail Sales (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 11:15 (GMT+3);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.14%, while the S&P 500 Index (US500) added 0.85%. The NASDAQ Technology Index (US100) closed positive by 1.58% on Thursday.

Factory inflation (PPI) in the US declined over the past month, another sign that overall inflationary pressures are cooling. But the labor market remains resilient, and this could be a trigger for the US Fed to raise rates even higher. The US jobless claims fell by 12,000 to 237,000 over the past week.

Federal Reserve Bank of San Francisco President Mary Daly said it was too early for policymakers to say they had done enough to bring US inflation back to target levels. The policymaker added that although the consumer price data released on Wednesday was “very positive,” she would take a “wait-and-see stance” as the Fed remains firmly committed to bringing inflation down to 2%.

Federal Reserve Bank of St. Louis President James Bullard, an influential US Fed official who called for aggressive interest rate hikes to combat the recent spike in inflation, has stepped down after 15 years in office. Bullard, 62, will step down completely on August 14 to become dean of the School of Business.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) increased by 0.74%, France’s CAC 40 (FR40) gained 0.52%, Spain’s IBEX 35 (ES35) added 0.33%, and the UK’s FTSE 100 (UK100) closed up by 0.32%.

The ECB’s monetary policy report from its June meeting confirmed that the ECB still believes policy tightening is necessary. As a result, another 25bp rate hike in July is a done deal. For the ECB to stop after that, it needs to see a further improvement in inflation dynamics, a transmission of monetary tightening to the real economy, including the labor market, and a downward revision of inflation forecasts. Committee officials do not consider a decline in inflation to be a sufficient condition for ending the tightening cycle if a robust labor market and strong wage growth prevail at the same time.

Oil prices rose in Asian trading on Friday and traded near 10-week highs on prospects of supply cuts amid disruptions in Libya and Nigeria. Oil markets rose sharply this week, following a decline in the dollar, as softer-than-expected US inflation data spurred bets that the Federal Reserve is close to peaking interest rates. In addition, the Organization of the Petroleum Exporting Countries (OPEC) highlighted rising global oil demand in 2023 in its monthly report released on Thursday.

Asian markets traded higher on Thursday. Japan’s Nikkei 225 (JP225) increased by 1.00% for the day yesterday, China’s FTSE China A50 (CHA50) jumped by 1.58%, Hong Kong’s Hang Seng (HK50) was up by 2.81%, and Australia’s S&P/ASX 200 (AU200) closed positive by 1.08%. On Friday, most Asian stocks continued to rise, ending a positive week amid signs of slowing inflation in the US. Hong Kong’s Hang Seng Index had its best weekly performance, rising nearly 6% as big tech stocks benefited from bets that the Chinese government will loosen its grip on the country’s largest internet companies.

Singapore’s economy grew slightly more than expected in the second quarter. GDP grew by 0.3% in the latest quarter, with Singapore avoiding a technical recession after GDP contracted by 0.4% last quarter. Singapore’s export sector is suffering badly due to slowing demand in China, a major trading partner.

Philip Lowe will not be reappointed as governor of the Reserve Bank of Australia (RBA). Michelle Bullock will take over as RBA governor in September. Ms. Bullock has been deputy governor of the bank since April 2022, having served since 1985.

S&P 500 (F)(US500) 4,510.04 +37.88 (+0.85%)

Dow Jones (US30) 34,395.14 +47.71 (+0.14%)

DAX (DE40)  16,141.03 +118.03 (+0.74%)

FTSE 100 (UK100) 7,440.21 +24.10 (+0.32%)

USD Index  99.43 −0.85 (−0.85%)

• – US FOMC Member Waller Speaks at 01:45 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
• – Eurozone Trade Balance (m/m) at 12:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

Stock indices closed higher on Wednesday due to cooling inflation in the United States. The consumer price level fell from 4% to 3% (3.1% expected) on an annualized basis. Core inflation (excludes food and energy prices) fell from 5.3% to 4.8% (5.0% expected). The sharp drop in inflation caused the dollar to fall to a 15-month low. Dollar weakness led most risk currencies, gold, and stock indices to rally. At yesterday’s stock market close, the Dow Jones (US30) Index was up by 0.25%, and the S&P 500 Index (US500) increased by 0.74%. The NASDAQ Technology Index (US100) closed positive 1.15% on Wednesday.

The US Treasury yields also declined following a weak inflation reading, as the data combined with signs of a cooling labor market spurred bets that the Fed is likely to soften its hawkish stance in the coming months. The probability of a rate hike at the July West meeting is 92%, while the probability of a hike at the September and November meetings is 14% and 26%, respectively.

On Wednesday, the Bank of Canada raised the overnight interest rate by 25 basis points to 5.00% and also extended its projected timetable for lowering Canada’s inflation rate to its 2% target by mid-2025. The Bank of Canada left little guidance on the way forward. At the press conference, the Bank of Canada Governor indicated that the improvement in overall momentum was largely due to lower energy prices rather than underlying pressures, hinting that restrictive policies will be in place for longer.

Equity markets in Europe were predominantly up yesterday. Germany’s DAX (DE30) jumped by 1.47%, France’s CAC 40 (FR40) gained 1.57%, Spain’s IBEX 35 (ES35) added 1.37%, and the UK’s FTSE 100 (UK100) closed positive by 1.83%.

UK GDP showed no growth for the second quarter of 2023. On an annualized basis, the economy contracted by 0.4%. Manufacturing fell by 0.6% in May 2023 after falling by 0.2% in April 2023. The construction sector fell by 0.2% in May 2023 after falling by 0.9% in April 2023. Services output showed no growth in May 2023 after rising by 0.3% in April 2023. Overall, economic conditions continue to deteriorate, which could pose a challenge for the Bank of England to further fight inflation.

Gold rose sharply yesterday amid a falling dollar and government bond yields. There are good growth prospects for gold as the US Fed is at the end of its tightening cycle. At the same time, silver shows better performance among precious metals.

Asian markets mostly traded higher on Wednesday. Japan’s Nikkei 225 (JP225) decreased by 1.04% yesterday, China’s FTSE China A50 (CHA50) was up by 0.15%, Hong Kong’s Hang Seng (HK50) added 1.14%, and Australia’s S&P/ASX 200 (AU200) closed positive 0.81% for the day.

In Japan, conditions for rising inflation are emerging, which puts pressure on the Bank of Japan to abandon its multi-year soft monetary policy. Markets are already betting on the Bank of Japan’s policy adjustment, which is reflected in the strengthening of the Japanese yen.

Last month, China’s exports contracted at the fastest pace since the COVID-19 pandemic began. Exports contracted by 12.4% year-on-year in June after falling by 7.5% in May. Imports fell by 6.8%, which was stronger than the 4.0% decline expected and the 4.5% drop in the previous month. The data indicate that China’s economic recovery has slowed after a strong first quarter, and analysts are now downgrading their forecasts for the economy for the rest of the year as factory output slows amid continued weak global demand.

S&P 500 (F) (US500) 4,472.16 +32.90 (+0.74%)

Dow Jones (US30) 34,347.43 +86.01 (+0.25%)

DAX (DE40)  16,023.00 +232.66 (+1.47%)

FTSE 100 (UK100) 7,416.11 +133.59 (+1.83%)

USD Index  100.28 −1.08 (−1.07%)

• – China Trade Balance (m/m) at 06:00 (GMT+3);
• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK Trade Balance (m/m) at 09:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By George Prior

The US Federal Reserve won’t be swayed and will raise interest rates this month despite inflation coming in cooler than expected, says the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

Nigel Green of deVere Group’s warning comes as the latest US CPI comes in lighter than economists predicted.

He says: “Despite the data showing that the battle against inflation in the world’s largest economy is being won, we expect the Federal Reserve will resume its interest rate hiking agenda this month.

“The central banks’ officials will argue that there is still work to be done to tame inflation and they are unlikely to be dissuaded from their course of action for the time being.

“While we believe that the Fed will raise rates in July, there is now less justification for further hikes later this year.”

The deVere CEO is urging the US central bank not to raise interest rates past July.

“Investors are increasingly concerned that the Federal Reserve could with further hikes overtighten and that would steer the US economy into a major recession.

“The central bank must also ensure the broader picture is maintained and not be too cautious by overdoing the hikes, which would trigger the US recession deeper and longer.

“As the world’s largest economy, this would clearly have a serious, negative impact on the global economy.

“The most aggressive tightening campaign in decades is not quite finished – but the tide could be turning.

“Against this backdrop, a good fund manager will help you pick out the winners and losers to help you sidestep the risks to your wealth and seize the opportunities to build it for the long-term.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.